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Program Budget & Cost Model (TILA-278)

Document ID: PM-003
Version: 1.0
Change History: 1.0 — Initial issue.
Standard(s): Program management

Program Budget & Cost Model — TILA-278

The development budget and cost model for the TILA-278 program: cost by function and phase, key assumptions and cost drivers, and the funding profile against the development plan and milestones.

TILA-278 (Virtual Biopharma Inc.) is a recombinant humanized immunoglobulin G1 (IgG1) bispecific monoclonal antibody, expressed in a Chinese hamster ovary (CHO) cell line and administered subcutaneously (SC), combining anti-TL1A (TNFSF15) antagonism with IL-22 receptor (IL-22R) agonism for the treatment of moderate-to-severe ulcerative colitis (UC). This cost model translates the Clinical Development Plan (PM-007) into a fully costed financial baseline for the transition from the completed Phase 2b induction study (TILA278-201) through Biologics License Application (BLA) and Marketing Authorisation Application (MAA) approval, and it is maintained in alignment with the Program Risk Register (PM-004) and the program governance and RACI framework (PM-002).

1. Purpose and Scope

This section establishes the development budget and integrated cost model for the TILA-278 confirmatory program. It provides the financial baseline against which functional spend is authorized, tracked, and re-forecast; it defines the assumptions and cost drivers underlying the estimate; and it presents the funding profile phased against the development plan and its milestones.

The model covers the remaining, forward-looking program cost from the point of the Phase 2b (TILA278-201) database lock through the anticipated first marketing-authorization action (US BLA under 21 CFR Part 601 and EU MAA via the centralized procedure). It encompasses the confirmatory clinical program (induction studies TILA278-301 and TILA278-302, maintenance study TILA278-303, and long-term extension TILA278-304), the associated Chemistry, Manufacturing, and Controls (CMC) scale-up and combination-product activities, the completion of the nonclinical package, clinical pharmacology and bioanalytical work, and the cross-functional regulatory, pharmacovigilance (PV), quality, and program-management activities required to file.

The estimate is prepared for a virtual operating model: Virtual Biopharma Inc. retains in-house medical, regulatory, technical, and program-management accountability and executes through contract research organizations (CROs), a contract development and manufacturing organization (CDMO), and specialty vendors. Commercial launch, marketing, field-force, and post-approval lifecycle-expansion costs are held in separate commercial and lifecycle budgets and are excluded here; pre-approval, at-risk commercial drug-product supply is included. All figures are expressed in United States dollars (USD, 2026 price base) unless otherwise stated.

2. Basis of Estimate and Key Assumptions

The estimate is constructed bottom-up. Clinical costs are built from per-protocol activity schedules, site and country footprints, and fully-burdened per-subject unit costs; CMC costs are anchored to CDMO batch quotations and a defined process-validation and comparability plan; nonclinical and clinical-pharmacology costs are based on vendor bids for the specific studies and validated assays required for a biotechnology-derived product. A single, consistent set of planning assumptions is applied across functions.

Table 2-1. Key planning assumptions

Parameter	Assumption
Currency / price base	USD, 2026 price base
Cost escalation	3.5% per annum on clinical and CDMO services
Foreign exchange	EU and rest-of-world spend converted at planning rates held flat to the base year
Screening ratio	~1.9 subjects screened per subject randomized (consistent with 1,700 screened / 900 randomized in TILA278-201)
Phase 3 site footprint	~280 activated sites across North America, Europe, and rest of world
Fully-burdened conduct cost per subject	$140,000 (12-week induction); $130,000 (52-week maintenance); ~$75,000 (open-label extension)
Probability of technical and regulatory success (Phase 3 → approval)	~55%, informed by the positive Phase 2b readout (Week-12 clinical remission 37.3% High vs 0.7% placebo)
Contingency policy	Governance-controlled reserve set at ~10.7% of the direct functional estimate
Scope inclusions	Confirmatory clinical program (301/302/303/304); CMC scale-up, process performance qualification (PPQ), comparability, and combination-product development; nonclinical completion; clinical pharmacology and bioanalysis; regulatory, PV, and quality; at-risk pre-approval drug-product supply
Scope exclusions	Commercial launch, marketing, medical-affairs field activities, and post-approval lifecycle/label-expansion studies (separate budgets)

The screening-ratio, per-subject, and site assumptions are deliberately conservative and mirror the observed conduct of TILA278-201, in which 1,700 subjects were screened to randomize 900 (299 High / 300 Low / 301 placebo), yielding a Full Analysis Set of 840 (284 / 283 / 273). The probability-of-success assumption reflects the strength and internal consistency of the Phase 2b readout — a dose-ordered, statistically significant clinical remission effect (37.3% High, 16.2% Low, 0.7% placebo) corroborated by the least-squares (LS) mean change in modified Mayo score (−3.36 / −2.76 / −1.00; differences versus placebo −2.36 / −1.77) and by endoscopic improvement (48.9% / 27.9% / 6.2%) — and is used only for the risk-adjusted, capital-allocation view (Section 6); the operating budget is presented on a risk-unadjusted base-case basis.

3. Cost by Function

The direct functional estimate for the remaining program is $553.5M, to which a governance-controlled contingency reserve of $59.0M is added for a base-case total of $612.5M. Clinical Operations and CMC / Technical Operations together represent roughly two-thirds of the program, reflecting the scale of a replicate confirmatory clinical program and the manufacturing complexity of a CHO-derived bispecific antibody delivered as a subcutaneous combination product.

Table 3-1. Remaining program cost by function (base case)

Function	Base-case cost (USD M)	Share
Clinical Operations (CRO, sites, investigators, central endoscopy reading, monitoring)	248.0	40.5%
CMC / Technical Operations (drug substance and drug product, PPQ, comparability, device/combination product, registration batches)	171.5	28.0%
Biostatistics & Data Management	28.5	4.7%
Medical Affairs / Program Management / allocated G&A	22.5	3.7%
Nonclinical Safety	22.0	3.6%
Regulatory Affairs	18.0	2.9%
Pharmacovigilance & Drug Safety	16.5	2.7%
Clinical Pharmacology & Bioanalytical	14.5	2.4%
Quality Assurance	12.0	2.0%
Direct functional subtotal	553.5	90.4%
Contingency reserve (~10.7% of direct)	59.0	9.6%
Total remaining program budget	612.5	100%

Shares are rounded and may not sum exactly to 100%.

CMC / Technical Operations carries a disproportionate unit cost relative to a conventional monoclonal antibody because the bispecific format requires engineered heterodimerization with orthogonal downstream purification (Protein A capture followed by polishing chromatography) to control chain-mispairing and product-related impurities (homodimers, half-antibody, and aggregates), together with a dual orthogonal potency-release strategy covering both anti-TL1A neutralization and IL-22R agonism. Clinical Operations is driven by the number of randomized subjects across the replicate induction studies, the long maintenance and extension follow-up, and the central-reading and biomarker infrastructure required to support objective (endoscopic and endoscopic-histologic) endpoints.

4. Cost by Phase / Workstream

The phase / workstream view is an alternative allocation of the same $553.5M direct estimate; the functional and phase breakdowns each sum to the program total. The clinical study workstreams (induction, maintenance, and extension) reflect conduct cost; CMC, nonclinical, clinical pharmacology, and cross-phase enabling functions are shown separately.

Table 4-1. Remaining program cost by phase / workstream (base case)

Phase / workstream	Base-case cost (USD M)
Phase 3 induction (TILA278-301, TILA278-302)	196.0
Phase 3 maintenance (TILA278-303)	78.0
Long-term extension (TILA278-304)	34.0
CMC / manufacturing & combination-product development	148.0
Nonclinical completion	22.0
Clinical pharmacology & bioanalytical	18.5
Cross-phase enabling (Regulatory, PV, Quality, Program Management)	57.0
Direct subtotal	553.5
Contingency reserve	59.0
Total remaining program budget	612.5
Memo — Phase 2b TILA278-201 (incurred / sunk)	92.0
Memo — Total program investment including incurred Phase 2b	704.5

Table 4-2. Clinical study conduct cost drivers

Study	Design / duration	Planned enrolled (approx.)	Fully-burdened conduct cost/subject (USD)	Study conduct cost (USD M)
TILA278-301	Induction, 12 weeks	~700	140,000	98.0
TILA278-302	Induction, 12 weeks (replicate)	~700	140,000	98.0
TILA278-303	Maintenance (randomized-withdrawal), to Week 52	~600 re-randomized	130,000	78.0
TILA278-304	Open-label extension, to Week 152	~450	~75,000	34.0
Subtotal — clinical conduct				308.0

Per-subject figures are fully burdened for study conduct (CRO, site, investigator, central endoscopy reading, and study-level monitoring) and are rounded; drug supply and bioanalysis are captured under CMC and Clinical Pharmacology, respectively.

The Phase 2b induction study (TILA278-201) is shown as a memo item because its cost is already incurred; it is excluded from the forward-looking authorization but is retained to present total program investment of $704.5M. The maintenance study carries a higher aggregate cost per subject than a single induction study because of its 52-week duration and repeat endoscopy, while the open-label extension is costed at a lower per-subject rate consistent with its open-label design and reduced assessment intensity.

5. Key Cost Drivers

Clinical. The dominant driver is subject volume across the replicate confirmatory design: approximately 1,400 subjects randomized across the two induction studies plus the maintenance and extension cohorts, each carrying fully-burdened conduct costs inflated by centrally read endoscopy, central histopathology for endoscopic-histologic endpoints, and biomarker analysis (faecal calprotectin, C-reactive protein). The competitive UC and TL1A trial landscape elevates site-activation and enrollment costs and is a principal schedule-and-cost sensitivity (Section 8).

CMC / Technical Operations. The molecule is manufactured by CHO cell culture with a downstream train comprising Protein A capture and polishing chromatography, plus dedicated viral-clearance steps qualified under ICH Q5A(R2). Cost is driven by: engineering and process-characterization lots; three consecutive PPQ drug-substance lots and corresponding drug-product lots; a formal comparability exercise (ICH Q5E) across clinical-to-commercial scale and site; stability programs conducted under ICH Q5C; specification-setting and orthogonal release/characterization testing under ICH Q6B (identity, higher-order structure, purity, charge variants, glycosylation, aggregates, and dual anti-TL1A / IL-22R potency); and development of the high-concentration SC drug product presented as a single-use prefilled syringe and autoinjector. The prefilled syringe and autoinjector constitute a combination product requiring design control and formative/summative human-factors studies, and a second-source qualification roadmap is provisioned to mitigate single-CDMO supply dependency.

Nonclinical. The completion package is built around the cynomolgus monkey as the sole pharmacologically relevant toxicology species (human TL1A and IL-22R specificity precludes conventional rodents), and comprises a chronic repeat-dose SC toxicology study with detailed gastrointestinal histopathology and proliferation endpoints, an enhanced pre- and postnatal development (ePPND) study in the cynomolgus monkey, tissue cross-reactivity, and safety-pharmacology assessments incorporated into the repeat-dose design per ICH S6(R1). Consistent with ICH S6(R1) and ICH E14/S7B, standalone genotoxicity, dedicated rodent carcinogenicity, in vitro hERG, and thorough-QT studies are not warranted for a monoclonal antibody; their omission is a deliberate, science-based cost avoidance relative to a small-molecule program, with carcinogenic potential addressed through a weight-of-evidence assessment and the chronic-study proliferation endpoints.

Clinical Pharmacology & Bioanalytical. Costs reflect a population-PK program built on a target-mediated drug disposition (TMDD) structural model with expected non-linearity at lower concentrations, exposure-response modeling anchored to TILA278-201 exposures to justify the induction and maintenance regimens, and a validated tiered immunogenicity (anti-drug antibody, ADA) assay (screening, confirmatory, titer, and neutralizing-antibody tiers) with pre-specified analyses of ADA impact on PK, efficacy, and safety.

Regulatory, Pharmacovigilance, and Quality. Costs cover the EOP2 and Scientific Advice interactions, BLA (21 CFR Part 601) and MAA preparation and eCTD publishing, Development Safety Update Report (DSUR) maintenance and post-approval periodic reporting readiness, the EU Risk Management Plan, and the audit and inspection-readiness program appropriate to a distributed, outsourced operating model.

6. Contingency and Risk Adjustment

A contingency reserve of $59.0M (approximately 10.7% of the $553.5M direct estimate) is held centrally and released only on governance approval against defined triggers (for example, an approved scope change, a materialized risk from PM-004, or a validated forecast overrun). Contingency is sized to absorb moderate schedule and unit-cost variability without re-baselining; a projected overrun exceeding the reserve triggers formal re-baselining (Section 9).

The $612.5M figure is the risk-unadjusted operating budget used to authorize spend. For capital-allocation and portfolio purposes, a risk-adjusted view applies a cumulative Phase-3-to-approval probability of technical and regulatory success of approximately 55% — a value supported by the positive, dose-ordered Phase 2b readout (Week-12 remission 37.3% High versus 0.7% placebo; modified Mayo LS-mean difference versus placebo −2.36 for the selected High dose). Because the program is funded on a milestone-gated, staged basis, capital is committed only to the next decision gate rather than to the full base case at the outset; the probability-weighted committed capital at any point is therefore materially below $612.5M, and the expected value of the program is protected by the option to stop at any gate that is not met.

7. Funding Profile and Cash Flow

Spend is phased against the development milestones defined in PM-007. Peak annual burn of $168.0M occurs in 2028, coinciding with peak induction conduct, the induction topline readout, and drug-substance/drug-product PPQ. Funding tranches are aligned to the program go/no-go gates (G2 End-of-Phase-2 alignment, G3 induction readout, G4 maintenance readout, G5 filing readiness), so that each subsequent tranche is committed only upon a successful gate transition.

Table 7-1. Base-case annual cash flow (remaining program)

Year	Base-case spend (USD M)	Principal milestones and activities
2026 (H2)	42.5	EOP2 meeting (FDA) / Scientific Advice (EMA), Q4 2026; Phase 3 start-up; CMC process characterization; chronic cynomolgus toxicology ongoing
2027	148.0	Induction studies 301/302 first-patient-in (Q1 2027); enrollment ramp; ePPND; drug-substance/drug-product scale-up
2028	168.0	Peak induction conduct and maintenance ramp; induction topline (H2 2028); PPQ campaign
2029	132.0	Maintenance conduct and Week-52 topline (H2 2029); registration/stability batches; BLA/MAA preparation
2030	84.0	BLA (rolling) and MAA submission (H1 2030); pre-approval inspection readiness; at-risk commercial supply build
2031	38.0	Marketing-application review; anticipated FDA action / EU opinion (2031); long-term extension continuation
Total	612.5

Given the virtual operating model and the capital intensity of the confirmatory program, funding continuity is managed through milestone-gated staged investment, an active partnering / financing strategy, and scenario-based portfolio planning under Board and executive oversight, consistent with risk RR-OP-05 in the Program Risk Register.

8. Sensitivity Analysis

The base-case total is sensitive to a small number of high-leverage drivers. The following one-at-a-time swings quantify the effect of each driver on the total program budget relative to the $612.5M base case.

Table 8-1. Cost sensitivity (one-at-a-time swings from base case)

Driver	Favorable Δ (USD M)	Unfavorable Δ (USD M)
Phase 3 enrollment duration (±6 months; site, monitoring, and drug carry)	−22.0	+48.0
Higher-than-assumed placebo response requiring sample-size re-powering	—	+55.0
CMC comparability / repeat PPQ and second-source qualification	−8.0	+34.0
Additional health-authority-requested study (e.g., dedicated sub-population or interaction study)	—	+26.0
Foreign exchange on ex-US clinical spend (±5%)	−12.5	+12.5
Immunogenicity-driven regimen change or added PK sampling	−4.0	+9.0

Aggregating these drivers under scenario / Monte-Carlo modeling yields an approximate P10–P90 range of $566.0M to $742.0M around the $612.5M base case. The $59.0M contingency reserve covers the modeled overrun to approximately the P70 level; a forecast breaching the reserve triggers re-baselining and governance re-authorization. The single largest upside cost risk is a higher Phase 3 placebo remission rate than the near-nil 0.7% observed in TILA278-201, which would require re-powering; this is mitigated by rigorous eligibility (objective inflammation required), central endoscopy reading, and conservative sizing in the confirmatory design.

9. Budget Governance and Change Control

The cost model is owned jointly by the Program Management Office (PMO) and Finance, approved by the Development Governance Committee, and maintained as a living instrument. Actuals are reconciled monthly against the approved baseline, and an Estimate-at-Completion (EAC) and Estimate-to-Complete (ETC) are re-forecast at each program review. Variances beyond defined thresholds — a functional or program-level variance exceeding the greater of 10% or a defined dollar limit — are escalated with a corrective-action plan.

Contingency release, scope changes, and re-baselining are controlled through a formal change-control process; contingency draw-down requires governance approval against a documented trigger. The budget is re-authorized at each go/no-go gate so that committed capital tracks program de-risking, and it is reconciled continuously against the Clinical Development Plan (PM-007), the governance and RACI framework (PM-002), and the Program Risk Register (PM-004) so that materialized risks and their financial impact are reflected in the current forecast.

10. Summary

The remaining TILA-278 development program is estimated at a risk-unadjusted base case of $612.5M (direct $553.5M plus a $59.0M contingency reserve), or $704.5M inclusive of the $92.0M already invested in Phase 2b. Clinical Operations (40.5%) and CMC / Technical Operations (28.0%) dominate the estimate, the latter reflecting the manufacturing and analytical complexity of a CHO-derived bispecific antibody delivered as a subcutaneous combination product. Spend peaks at $168.0M in 2028 and is funded on a milestone-gated, staged basis aligned to the confirmatory readouts, with a modeled P10–P90 range of $566.0M to $742.0M. The estimate is de-risked by a strong, internally consistent Phase 2b readout and is disciplined by the omission of studies not warranted for a monoclonal antibody (genotoxicity, dedicated carcinogenicity, hERG, and thorough-QT). The model will be maintained as a living financial baseline through the confirmatory program and marketing-application preparation.

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Abbreviations: ADA, anti-drug antibody; BLA, Biologics License Application; CDMO, contract development and manufacturing organization; CHO, Chinese hamster ovary; CMC, Chemistry, Manufacturing, and Controls; CRO, contract research organization; CRP, C-reactive protein; DSUR, Development Safety Update Report; EAC, Estimate-at-Completion; EMA, European Medicines Agency; EOP2, End of Phase 2; ePPND, enhanced pre- and postnatal development; ETC, Estimate-to-Complete; FDA, U.S. Food and Drug Administration; G&A, general and administrative; IgG1, immunoglobulin G1; IL-22R, interleukin-22 receptor; LS, least-squares; MAA, Marketing Authorisation Application; PK, pharmacokinetics; PMO, Program Management Office; PPQ, process performance qualification; PV, pharmacovigilance; Q2W/Q4W, every 2/4 weeks; SC, subcutaneous; TL1A, TNF-like ligand 1A (TNFSF15); TMDD, target-mediated drug disposition; UC, ulcerative colitis; USD, United States dollars.